Your client may enjoy overseeing a private family foundation, but private foundations have a number of financial and administrative disadvantages when compared to public charities. These drawbacks include greater investment restrictions, mandatory distribution and reporting responsibilities, fewer tax benefits and the sometimes-heavy burden of personally administering a private foundation.
| Compare | Greater Toledo Community Foundation | Private Foundation |
| Tax treatment of cash gifts | Deductible up to 50 percent of Adjusted Gross Income (AGI) | Deductible up to 30 percent of AGI |
| Tax treatment of gifts of appreciated publicly-traded securities | Full market value deduction up to 30 percent of AGI | Full market value deduction up to 20 percent of AGI |
| Tax treatment of closely-held stock or real estate | Full market value deduction up to 30 percent of AGI | Deduction limited to donor’s cost basis, up to 20 percent of AGI |
| Excess business holdings | No restriction | Can hold no more than 20 percent of a business |
| Excise taxes | No excise taxes | Excise tax of 1-2 percent of net investment income annually |
| Required payout | No required payout. Can accumulate income toward a sizable project or grant. Has flexibility to hold low-yield property | Required to expend 5 percent of asset value annually, whether or not the Foundation’s investments earn that amount |
| Incorporation and tax exemption | Automatically covered by Greater Toledo Community Foundation (GTCF) | Must create corporation and apply for tax exemption |
| Privacy | Individual donors or grants can be kept private. If donor wishes, GTCF can serve as a buffer between donor and grant-seekers, allowing donors to remain anonymous. | Foundation required to file detailed tax returns on grants, investment fees, trustee fees, staff salaries, etc. These are public records and are compiled into directories for grant-seekers. |
| Liability and insurance | Automatically covered by GTCF’s liability and office insurance policies | Any directors and officer’s liability insurance, employee bonding, and office insurance must be separately purchased |
| Investment, accounting, audit and tax returns | GTCF handles all investments and accounting. GTCF files annual tax return and provides annual independent audit. | Trustees must perform, contract or hire staff for these services. |
| General administration | GTCF handles all financial and administrative management | Trustees must perform, contract or hire staff for these services. |
| Grant administration including new Patriot Act requirements | If donor wishes, GTCF can assist in establishing grant making guidelines and philanthropic goals, identifying potential recipients, investigating applicants, making grant payments and monitoring performance. | Trustees must perform, contract or hire staff for these services. |
| Costs | There are no fees to establish a fund at GTCF; however, there is an annual administrative fee ranging from .40 to 1.45% based on fund type plus a bank/investment fee of .25%. | Recent figures show that private foundations of under $5 million had average costs of 6.27% of assets and the average administrative cost of private foundations was 1.4% of assets. |
The Foundation offers a variety of ways for you to make donations to reach your philanthropic goals. Corporations and businesses are limited to gifts of cash, securities, closely-held stock, limited partnership interests and real estate. Individuals and families have even more options to consider.
ExploreThe Foundation offers a number of fund options for you, your family, businesses and nonprofit organizations. The funds are flexible and you decide how much or how little you want to be involved in making grants.
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300 Madison Ave., Suite 1300
Toledo, OH 43604
Phone: 419.241.5049
Fax: 419.242.5549
Email: toledocf@toledocf.org
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